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9 Decision Making

Chapter Objectives

When you finish reading this chapter you will understand why

Richard has had it! There’s only so much longer he can go on watching TV on his tiny, antiquated set. It was bad enough trying to squint at The Walking Dead. The final straw was when he couldn’t tell the Titans from the Jaguars during an NFL football game. When he went next door to watch the second half on Mark’s home theater

9-1 The three categories of consumer decision making are cognitive, habitual, and affective. 9-2 A cognitive purchase decision is the outcome of a series of stages that results in the selection of one product over competing options. 9-3 We often rely on rules-of-thumb to make routine decisions. 9-4 The way information about a product choice is framed can prime a decision even when the consumer is unaware of this influence.

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setup, he finally realized what he was missing. Budget or not, it was time to act: A man has to have his priorities.

Where to start looking? The web, naturally. Richard checks out a few comparison-shopping websites, including pricegrabber.com/ and bizrate.com. After he narrows down his options, he ventures out to check on a few sets in person. He figures he’ll probably get a decent selection (and an affordable price) at one of those huge “big box” stores. Arriving at Zany Zack’s Appliance Emporium, Richard heads straight for the Video Zone in the back; he barely notices the rows of toasters, microwave ovens, and stereos on his way. Within minutes, a smiling salesperson in a cheap suit accosts him. Even though he could use some help, Richard tells the salesperson he’s only browsing. He figures these guys don’t know what they’re talking about, and they’re simply out to make a sale no matter what.

Source: Stefanocapra/Fotolia

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Richard examines some of the features on the 60-inch flatscreens. He knew his friend Evey had a set by Prime Wave that she really liked, and his sister Alex warned him to stay away from the Kamashita. Although Richard finds a Prime Wave model loaded to the max with features such as a sleep timer, on-screen programming menu, cable-compatible tuner, and picture-in-picture, he chooses the less expensive Precision 2000X because it has one feature that really catches his fancy: stereo broadcast reception.

Later that day, Richard is a happy man as he sits in his easy chair and watches Sheldon match wits with Leonard, Howard, and the others on The Big Bang Theory. If he’s going to be a couch potato, he’s going in style.

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What’s Your Problem?

Richard’s decision represented his response to a problem. In fact every consumer decision we make is a response to a problem. Of course, the type and scope of these problems varies enormously; our needs range from simple physiological priorities such as quenching thirst to whether we will spend our hard-earned money on a television to abstract intellectual or aesthetic quandaries such as choosing a college major—or perhaps what to wear to that upcoming Bruno Mars concert.

Because some purchase decisions are more important than others, the amount of effort we put into each differs. Sometimes the decision-making process is almost automatic; we seem to make snap judgments based on little information. At other times it resembles a full-time job. A person may literally spend days or weeks agonizing over an important purchase such as a new home, a car, or even an iPhone versus a Samsung Galaxy.

We make some decisions thoughtfully and rationally as we carefully weigh the pros and cons of different choices. In other cases we let our emotions guide us to one choice over another as we react to a problem with enthusiasm, joy, or even disgust. Still other actions actually contradict what those rational models predict. For example, purchase momentum occurs when our initial impulse purchases actually increase the likelihood

The three categories of consumer decision making are cognitive, habitual, and affective. OBJECTIVE 9-1

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that we will buy even more (instead of less as we satisfy our needs); it’s like we get “revved up” and plunge into a spending spree (we’ve all been there!).

Hyperchoice: Too Much of a Good Thing!

Given the range of problems we all confront in our lives, clearly it is difficult to apply a one-size-fits-all explanation to the complexities of consumer behavior. Things get even more complicated when we realize just how many choices we have to make in today’s information-rich environment. Ironically, for many of us one of our biggest problems is not having too few choices, but rather too many.

This condition of consumer hyperchoice forces us to make repeated decisions that may drain psychological energy while decreasing our abilities to make smart choices. A study conducted in a grocery store illustrates how having too much can handicap our thought processes. Shoppers tried samples of flavored fruit jams in two different conditions: in the “limited choice” condition they picked from six flavors, whereas those in the “extensive choice” group saw 24 flavors. Thirty percent of consumers in the limited group actually bought a jar of jam as a result, and a paltry 3 percent of those in the extensive group did.

Part of what we’re going to discuss in this chapter already is familiar ground to you. In Chapter 4 we reviewed approaches to learning that link options to outcomes, where over time we come to link certain choices to good or bad results. In Chapter 5 we talked about affective decision making; how our emotional responses drive many of our choices. And, in

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Chapter 8 we reviewed three hierarchies of effects, or the sequence of steps involving thinking, feeling, and eventually doing. These ideas really relate to types of decision making because they remind us that depending on the situation and the importance of what we’re dealing with, our choices can be dominated by “hot” emotions, “cold” information processing, or even “lukewarm” snap decisions. Figure 9.1 summarizes the three “buckets” of consumer decision making.

Figure 9.1 The Three “Buckets” of Consumer Decision Making

Researchers now realize that decision makers actually possess a repertoire of strategies. The perspective of constructive processing argues that we evaluate the effort we’ll need to make a particular choice and then tailor the amount of cognitive “effort” we expend to get the job done. When the task requires a well-thought-out, rational approach, we’ll invest the brainpower to do it. Otherwise, we look for shortcuts such as “just do what I usually do,” or perhaps we make “gut” decisions based on our emotional reactions. In some cases, we actually create a mental budget that helps us to estimate what we will consume over time so that we can regulate what we do in the present. If the dieter knows he will be chowing down at a big BBQ tomorrow, he may decide to skip that tempting candy bar today.

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Self-Regulation

Each of us fights a constant battle to control our desires, whether these involve splurging on expensive clothes or treating ourselves to fattening snacks. Many factors, both internal (for example, will-power) and external (for example, peer pressure), help to determine whether or when we give in. Even something as innocent as checking your Facebook page can make you lose control! Recent research implies that when you focus on what your close friends post, this makes you feel better. This momentary boost in self-esteem we get in turn prompts us to lose self-control and engage in impulsive behaviors such as binge eating and even reckless spending that lowers credit scores.

The buckets of decision making we just described don’t necessarily work independently of one another. Think for example about Orlando, a 28-year- old marketing manager who has decided to embark on a weight-loss program. The pressure is on to drop the pounds before he marries Amanda this summer. Orlando knows he needs a plan if he has any chance to succeed.

A person’s efforts to change or maintain his or her actions over time, whether these involve dieting, living on a budget, or training to run a marathon, involve careful planning that is a form of self-regulation . If we have a self-regulatory strategy, this means that we specify in advance how we want to respond in certain situations. These “if-then” plans or implementation intentions may dictate how much weight we give to different kinds of information (emotional or cognitive), a timetable to carry

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out a decision, or even how we will deal with disruptive influences that might interfere with our plans (like a bossy salesperson who tries to steer us to a different choice).

Orlando may engage in cognitive decision making as he carefully selects a diet and perhaps compiles a list of foods he will “ban” from his kitchen. In addition, he may have to recognize that he has a behavioral pattern of snacking on junk food in the mid-afternoon whether he’s really hungry or not. Simple, but powerful, behavioral cues in the environment like that Snickers bar sitting on his coworker Arya’s desk can lead us to quick and sometimes rash actions (how will Orlando explain the “disappearance” of that candy bar to Arya?) He may also have to recognize that some emotional “triggers” set him off so when his boss yells at him his first response is to reach for the sweets to cheer himself up.

Orlando may have to “argue” with himself as he weighs the long-term benefits of a successful diet against short-term temptations. In some cases, this involves some creative tinkering with the facts—for example, consumers engage in counteractive construal when they exaggerate the negative aspects of behaviors that will interfere with the ultimate goal. Orlando may inflate the number of calories in the snack to help him to resist its lure. He may even go public with his weight loss plan by posting his weekly weigh-in on a phone app like DietBet so that others can watch his progress—and even bet on his success or failure.

A recent study shed some light on why our efforts to self-regulation get stronger or weaker over time as we progress toward a goal – and especially why what starts out as an exciting quest turns into a painful slog even though we’re getting closer to the objective. The researchers distinguished between two types of motivation: (1) Promotion motivation encourages people to focus on hopes and aspirations, while (2) Prevention motivation instead focuses on responsibilities and duties

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as it prompts people to think about avoiding something negative. We referred to these strategies as “approach” and avoidance” when we talked about learning in Chapter 4 . As they predicted, individuals tend to be more promotion-motivated in earlier stages of goal pursuit and become more prevention-motivated as goal attainment draws near. The researchers speculate that when we are in the early stages of attaining a goal, we compare our progress with where we started, so we are optimistic. But after we reach the midpoint, we switch our reference to the end goal we’re striving for—and thus focus on our shortcomings instead. Their advice: In the early stages, focus on how attaining the goal will help you to achieve things you hope for (such as a healthy body). Then when you’re in the home stretch, focus on how getting to your goal will help you to fulfill your responsibilities. And, make a list of things “not to do” to stay on course. Finally, reward yourself with a break from something you don’t enjoy when you’re making progress so long as it doesn’t short-circuit your efforts (e.g., no congratulatory margaritas if you’re trying to get sober).

In recent years, researchers and marketers have become more aware of the role they can play in changing consumer behavior by helping people to regulate their own actions. This help may take the form of simple feedback like a phone app for dieters or perhaps a wearable computing device like the Fitbit that tells you how many steps you take in a day (and how many more you should take). These applications provide a feedback loop to help with self-regulation. The basic premise is amazingly simple: Provide people with information about their actions in real time, and then give them a chance to change those actions so that you push them to improve. A common feedback loop we increasingly see on highways comes from those “dynamic speed displays” that use a radar sensor to flash “Your Speed” when you pass one. This isn’t new information; all you have to do is look at your speedometer to know the same thing. Yet on average these displays result in a 10 percent reduction in driving speed among motorists for several miles following exposure to the feedback loop.

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The Tangled Web Does seeing “beach bodies” on Instagram lead people to make foolish purchases? In a study, overweight people who saw a thin person were more likely to purchase a more expensive product and take on credit card debt than were normal weight participants. The researchers explain that exposure to images like this reminded these people that they are not good at inhibiting their impulses—so this realization loosened the purse strings. To add insult to injury, the thin images didn’t have to be of people—even seeing pictures of thin Coke bottles made the subjects reach for pricier products!

Now, the bad news: As any frustrated dieter knows, self-regulation doesn’t necessarily work. Just because we devise a well-meaning strategy doesn’t mean we’ll follow it. Sometimes our best-laid intentions go awry literally because we’re too tired to fight temptation. Research shows that our ability to self-regulate declines as the day goes on. The Morning Morality Effect shows that people are more likely to cheat, lie, or even commit fraud in the afternoon than in the morning. Scientists know that the part of the brain they call the executive control center that we use for important decision making, including moral judgments, can be worn down or distracted even by simple tasks like memorizing numbers. As one researcher nicely put it, “To the extent that you’re cognitively tired, you’re more likely to give in to the devil on your shoulder.”

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Other studies show that, ironically the act of planning itself can undermine our ability to attain goals. When a person is not happy with his or her progress toward a goal like weight loss, the act of thinking about what he or she needs to do to improve performance can cause emotional distress. This angst in turn results in less self-control. And, when people are able to easily recall prior instances when they were able to exert self- control, they are more successful at the present task. On the other hand, when they recall times that resulted in failure, they’re more likely to indulge again.  As we saw in the last chapter’s discussion of attitudes and behavior, “the road to hell is paved with good intentions!”

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Cognitive Decision Making

Traditionally, consumer researchers approached decision making from a rational perspective . According to this view, people calmly and carefully integrate as much information as possible with what they already know about a product, painstakingly weigh the pluses and minuses of each alternative, and arrive at a satisfactory decision. This kind of careful, deliberate thinking is especially relevant to activities such as financial planning that call for a lot of attention to detail and many choices that impact a consumer’s quality of life. When marketing managers believe that their customers in fact do undergo this kind of planning, they should carefully study steps in decision making to understand just how consumers weigh information, form beliefs about options, and choose criteria they use to select one option over others. With these insights in hand, they can develop products and promotional strategies that supply the specific information people look for in the most effective formats.

A cognitive purchase decision is the outcome of a series of stages that results in the selection of one product over competing options.

OBJECTIVE 9-2

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Dynamic speed displays provide a feedback loop to help drivers regulate their speed. Source: cre250/Fotolia

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Steps in the Cognitive Decision-Making Process

Let’s think about Richard’s process of buying a new TV that we described at the beginning of the chapter. He didn’t suddenly wake up and crave a new flatscreen. Richard went through several steps between the time he felt the need to replace his TV and when he actually brought one home. We describe these steps as (1) problem recognition, (2) information search, (3) evaluation of alternatives, and (4) product choice. Of course, as we saw in Chapter 4 , after we make a decision, its outcome affects the final step in the process, in which learning occurs based on how well the choice worked out. This learning process in turn influences the likelihood that we’ll make the same choice the next time the need for a similar decision occurs. And so on and so on. Figure 9.2 provides an overview of this decision- making process. Let’s briefly look at each step.

Figure 9.2 Stages in Consumer Decision Making

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Step 1: Problem Recognition Ford’s plan to promote its Fusion hybrid model focused on people who aren’t thinking about buying a new car—at least not right now. Its TV commercials target what the auto industry terms the “upper funnel,” or potential buyers down the road. Ford’s research found that a large number

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of U.S. drivers are still unaware of the Fusion. The company is confident that it can close sales if and when customers decide to buy a new car. But, its weak spot is to get people into the frame of mind where they want to do that. To create desire where none yet exists, visitors to a special website entered to win a trip and a new Fusion. Ford publicized the sweepstakes on Twitter and Facebook; during the first two weeks of the promotion, almost 70,000 people requested more information about the car.

Problem recognition occurs at what Ford terms the upper funnel, when we experience a significant difference between our current state of affairs and some state we desire. As we noted at the beginning of the chapter, this problem requires a solution. A person who unexpectedly runs out of gas on the highway has a problem, as does the person who becomes dissatisfied with the image of his car, even though there is nothing mechanically wrong with it. Although the quality of Richard’s TV had not changed, he altered his standard of comparison, and as a result he had a new problem to solve: how to improve his viewing experience.

Figure 9.3 shows that a problem arises in one of two ways. The person who runs out of gas experiences a decline in the quality of his actual state (need recognition). In contrast, the person who craves a newer, flashier car moves his ideal state (opportunity recognition) upward. Either way, there is a gulf between the actual state and the ideal state. Richard perceived a problem because of opportunity recognition: He moved his ideal state upward in terms of the quality of TV reception he craved.

Figure 9.3 Problem Recognition: Shifts in Actual or Ideal States

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Step 2: Information Search Once a consumer recognizes a problem, he or she needs the 411 to solve it. Information search is the process by which we survey the environment for appropriate data to make a reasonable decision. You might recognize a need and then search the marketplace for specific information (a process we call prepurchase search). However, many of us, especially veteran shoppers, enjoy browsing just for the fun of it or because we like to stay up to date on what’s happening in the marketplace. Those shopaholics engage in ongoing search. As a general rule, we search more when the purchase is important, when we have more of a need to learn more about the purchase, or when it’s easy to obtain the relevant information.

Does knowing something about the product make it more or less likely that we will engage in research? The answer to this question isn’t as obvious as it first appears: Product experts and novices use different strategies when they make decisions. “Newbies” who know little about a product should be

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the most motivated to find out more about it. However, experts are more familiar with the product category, and thus they should be better able to understand the meaning of any new product information they might acquire.

So, who searches more? The answer is neither: Search tends to be greatest among those consumers who are moderately knowledgeable about the product. Typically we find an inverted-U relationship between knowledge and search effort, as Figure 9.4 shows. People with limited expertise may not feel they are competent to search extensively. In fact, they may not even know where to start. Richard, who did not spend a lot of time researching his purchase, is typical. He visited one store, and he looked only at brands with which he was already familiar. In addition, he focused on only a small number of product features.

Figure 9.4 The Relationship Between Amount of Information Search and Product Knowledge

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Because experts have a better sense of what information is relevant to the decision, they engage in selective search, which means their efforts are more focused and efficient. In contrast, novices are more likely to rely on the opinions of others and on “nonfunctional” attributes, such as brand name and price, to distinguish among alternatives. Finally, novice consumers may process information in a “top-down” rather than a “bottom- up” manner; they focus less on details than on the big picture. For instance, they may be more impressed by the sheer amount of technical information an ad presents than by the actual significance of the claims it makes.

Any trial lawyer will tell you never to ask a question of a witness unless you already know what he or she will answer. Consumers too like to consult reliable sources that tend to tell them what we want to hear. We can see that the search process isn’t perfect, so there’s always some bias in terms

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of what we get when we cast our nets. This is true whether we’re asking people we know for advice, or trolling online.

The internet puts an almost limitless supply of information at our fingertips —at least in theory. The reality often is quite different. Rather than taking advantage of many sources that may provide us with a range of opinions or options when we want to make a decision, sophisticated algorithms insure that we only access content that reinforces what we already think we know. A filter bubble occurs when the broadcast media, websites, and social media platforms we consult serve up answers based upon what they “think” we want to see. For example, we get personalized Google search results and a Facebook news stream that’s based upon sites we’ve clicked on in the past, our browsing history, and our physical location. This means we’re far less likely to be exposed to conflicting viewpoints, so we each live in a “bubble” of our own making. Conservatives who watch Fox News religiously will see stories that confirm their beliefs, while their liberal counterparts get the same assurance from MSNBC. Thus what starts as a search for the best information upon which to base our decisions may end in a self-fulfilling prophecy where we only read and see content that confirms what we thought all along.

Step 3: Evaluate Alternatives Much of the effort we put into a purchase decision occurs at the stage where we have to put the pedal to the metal and actually choose a product from several alternatives. This may not be easy; modern consumer society abounds with choices. In some cases, there may be literally hundreds of brands (as in cigarettes) or different variations of the same brand (as in shades of lipstick).

Ask a friend to name all the brands of perfume she can think of. The odds are she will reel off three to five names rather quickly, then stop and think

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awhile before she comes up with a few more. She’s probably familiar with the first set of brands, and in fact she probably wears one or more of these. Her list may also contain one or two brands that she doesn’t like; to the contrary, they come to mind because she thinks they smell nasty or are unsophisticated. Note also that there are many, many more brands on the market that she did not name at all.

If your friend goes to the store to buy perfume, it is likely that she will consider buying some or most of the brands she listed initially. She might also entertain a few more possibilities if these come to her attention while she’s at the fragrance counter (for example, if an employee “ambushes” her with a scent sample as she walks down the aisle).

We call the alternatives a consumer knows about the evoked set and the ones he or she seriously considers the consideration set . Recall that Richard did not know much about the technical aspects of television sets, and he had only a few major brands in mind. Of these, two were acceptable possibilities and one was not.

For obvious reasons, a marketer who finds that his brand is not in his target market’s evoked set has cause to worry. You often don’t get a second chance to make a good first impression; a consumer isn’t likely to place a product in his evoked set after he has already considered it and rejected it. Indeed, we’re more likely to add a new brand to the evoked set than one that we previously considered but passed over, even after a marketer has provided additional positive information about it. For marketers, a consumer’s reluctance to give a rejected product a second chance underscores the importance of ensuring that it performs well from the time the company introduces it.

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Net Profit As the old saying goes, “If it sounds too good to be true, it probably is.” When we check out online reviews of a product and they’re all glowing, we tend to be a bit suspicious. It’s actually more effective for a review to include some negative reviews—if shoppers think they’re irrelevant. Why? We usually assign a lot of weight to negative information because we expect it to be more diagnostic than sugar-coated comments. So, when we encounter bad stuff but we don’t feel it’s very helpful, we still feel that we have more complete information about the product, and thus we’re comfortable that we can make a wise choice.

Step 4: Product Choice Once we assemble and evaluate the relevant options in a category, eventually we have to choose one. Recall that the decision rules that guide our choices range from simple and quick strategies to complicated processes that require a lot of attention and cognitive processing. Our job isn’t getting any easier as companies overwhelm us with more and more features. We deal with 50-button remote controls, digital cameras with hundreds of mysterious features and book-length manuals, and cars with dashboard systems worthy of the space shuttle. Experts call this spiral of complexity feature creep . As evidence that the proliferation of gizmos is counterproductive, Philips Electronics found that at least half of the products buyers return have nothing wrong with them; consumers simply couldn’t understand how to use them! What’s worse, on average the

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buyer spent only 20 minutes trying to figure out how to use the product and then gave up.

Why don’t companies avoid this problem? One reason is that we often assume the more features the better. It’s only when we get the product home that we realize the virtue of simplicity. In one study, consumers chose among three models of a digital device that varied in terms of how complex each was. More than 60 percent chose the one with the most features. Then, when the participants got the chance to choose from up to 25 features to customize their product, the average person chose 20 of these add-ons. But when they actually used the devices, it turned out that the large number of options only frustrated them; they ended up being much happier with the simpler product. As the saying goes, “Be careful what you wish for.”30

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As feature creep becomes more of a problem, just providing clear instructions to users is a major “pain point” for many manufacturers. Source: supercavie/Shutterstock.

Marketing Pitfall Product labels assist us with problem solving, but some are more useful than others. Here are some examples of the not-so-helpful variety:

Instructions for folding up a portable baby carriage: “Step 1: Remove baby.” On a Conair Pro Style 1600 hair dryer: “WARNING: Do not use in shower. Never use while sleeping.” At a rest stop on a Wisconsin highway: “Do not eat urinal cakes.” On a bag of Fritos: “You could be a winner! No purchase necessary. Details inside.” On some Swanson frozen dinners: “Serving suggestion: Defrost.” On Tesco’s Tiramisu dessert (printed on bottom of box): “Do not turn upside down.” On Marks & Spencer bread pudding: “Product will be hot after heating.” On packaging for a Rowenta iron: “Do not iron clothes on body.” On Nytol sleeping aid: “Warning: May cause drowsiness.”

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Step 5: Postpurchase Evaluation Another old saying goes, “the proof of the pudding is in the eating.” In other words, the true test of our decision-making process is whether we are happy with the choice we made after we undergo all these stages. Postpurchase evaluation closes the loop; it occurs when we experience the product or service we selected and decide whether it meets (or maybe even exceeds) our expectations. We’ll take a closer look at that in the next chapter.

When all is said and done with the transaction, is the customer always right? Not anymore. Today, postpurchase evaluation is just starting to work both ways. In the process called social scoring , both customers and service providers increasingly rate one another’s performance. Have you ever written a negative review of your Uber driver or a server at a restaurant? A heads up: While we’re busily documenting our interactions with salespeople and other service providers, they’re returning the favor. People who work in small businesses have always been aware of problem customers who drop in periodically to torment them. But now, at least in theory, a salesperson or other service provider at any kind of organization large or small can grade your behavior. And the icing on the cake is that they can share these scores with others. It’s no longer only Santa who knows if you’ve been naughty or nice.

At platforms like Airbnb and Uber, users get a rating each time they patronize the service. It’s no surprise that according to Lyft and Uber drivers, failure to leave a tip is a sure-fire road to a dismal evaluation. For your future reference, these are some other behaviors that will make or break a five-star rating straight from the mouths of operators:

“Don’t puke in or ruin the car.”